September 9th, 2022

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Vietnam Technological and Commercial Joint Stock Bank

[ Viet Nam / Banking ] Bloomberg Code (TCB VN) | Reuters Code (TCB.HM)

Oustanding asset quality

BUY
Initiate coverage Initiate coverage with BUY rating and target price of VND 58,700
Tecombank (HoSE: TCB) is one of the largest retail banks in Vietnam, with remarkable success.
Target price (12 months) 58,700VND TCB's strategy is not only focusing on investing in technology but also on building an overall digital-
Current price (09/09/22) 37,550VND data system with talented personnel. The bank is currently leading the system with many vital
Suất sinh lời (%) 56% indicators such as ROA, CASA ratio, and bad debt ratio (NPL). We value TCB for the first time at
VND 58,700, equivalent to an upside of 56%.

Outstanding asset quality in the industry with a thick capital buffer, low NPL ratio,
high NPL coverage
[ Analyst ] The CAR ratio by June 2022 reached 15.7%, nearly double the requirement of Basel II on capital
adequacy ratio. Equity reached VND 104,473 billion in 1H2022, ranking second in the system. NPL
Xuân Nguyễn ☎ (84-28) 6299-7759
was the lowest in the industry, gaining 0.6% in 1H2022, with a high NPL coverage ratio of 171.6%.
 xuan.nht@shinhan.com
High profitability benefits from the low capital cost
VNINDEX 1,245
TCB has a cost advantage, as leading the industry with a CASA ratio of 47.5% as of 1H2022 and
HNXINDEX 282
Market cap (bn VND) 132,424 successfully approaching offshore loan syndication market of USD 1 billion in early 2022. Low cost
Outstanding shares (1mn) 3,517 helps TCB have a competitive advantage in lending interest rates, and NIM has many potentials
Free float (1mn) 2,714 to expand. NIM improved from 4% in 2017 to 5.6% in 2021, and remained until 1H2022.
52-week high/low (VND) 56,000/32,550
90-day avg. trading volume (1mn) 5.1
The ability to adjust credit structure allows TCB to change appropriately with the
90-day avg. turnover (bn VND) 166 market
Foreign ownership (%) 27.5 TCB leads the market in corporate bond investment, reaching VND 62,609 billion in 2021.
However, TCB has reduced the number of corporate bonds to VND 49,345 billion in 2Q2022,
Major shareholders (%) Masan Group Corporation 14.93 shifting its strategy to loans to customers, especially housing loans for individuals. The restructure
Directors and relevants 0.42
is appropriate in the context of the unstable market and the increase in control of the State Bank
3T 6T 12T (SBV) in corporate bonds.
Performance
Absolute (%) 7.1 27.7 59.2 A unique ecosystem provides a strong and diverse source of non-interest income
Relative to VN-Index(%) 5.6 -7.8 -16.3
The cooperation between TCB and Masan and Vingroup has brought many benefits in attracting
VN Index (LHS)
individual customers, helping TCB increase fee income from service activities. Besides, TCB has
(pts) (VND)
1,600
TCB VN Equity (RHS)
60,000
many advantages in bancassurance activities with the exclusive 15-year cooperation with Manulife.

1,500 50,000 Risks (1) Inflation risk; (2) Increase in bad debt; (3) Unstable real estate market.
1,400 40,000
Year to Dec. 2021 2022F 2023F 2024F 2025F
1,300 30,000
Net interest income (bn VND) 26,699 32,410 38,568 47,706 56,055
1,200 20,000 Net non-interest income (bn VND) 10,378 10,045 11,551 13,358 15,540
TOI (bn VND) 37,076 42,454 50,118 61,065 71,595
1,100 10,000
TOI before provision (bn VND) 25,903 28,898 33,561 40,699 46,361
1,000 0 NPAT (bn VND) 18,415 21,794 25,087 30,592 34,765
09/21 12/21 03/22 06/22
EPS (VND) 5,245 6,197 7,133 8,698 9,885
EPS growth rate (%) 46.1 18.2 15.1 21.9 13.6
P/E (x) 7.4 6.3 5.5 4.5 3.9
P/B (x) 1.5 1.2 1.0 0.8 0.7
ROA (%) 3.6 3.4 3.3 3.3 3.1
ROE (%) 21.5 20.6 19.3 19.3 18.1
Source: Company data, Shinhan Securities Vietnam

Shinhan Securities Vietnam Co., Ltd. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have
a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Analysts
employed by Shinhan Securities Vietnam Co., Ltd. , or a non-US affiliate thereof, are not registered/qualified as research analysts with FINRA, may not be associated persons of
the member and may not be subject to FINRA restrictions on communications with a subject company, public appearances and trading securities held by a research analyst
account. For analyst certification and important disclosures, refer to the Compliance & Disclosure Notice at the end of this report.
 [Vietnam / Banking]
COMPANY REPORT September 9th 2022
Vietnam Technological and Commercial Joint Stock Bank (TCB)

Contents

3 Company background

6 Investment Catalysts & Theses

10 Earnings estimates

11 Valuation and Recommendation

15 Risks

16 Appendix : Financial statements

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COMPANY REPORT September 9th 2022
Vietnam Technological and Commercial Joint Stock Bank (TCB)

Company background

History

 Signed a cooperation  Strengthened capacity in

 Listed on Ho Chi Minh City Stock
 HSBC increased the agreement with Vietnam digitization and data
Exchange – ticker TCB, with
ownership to 15% Airlines  Implemented Agile working
capitalisation of USD 6.5 billion
 Launched the  Acquired Vietnam Chemical method
Established with charter  Tripled charter capital to VND 34,966
Techcombank Visa Finance JSC and changed its  Established Data & Analytics
capital of VND 20 billion billion
credit card name to TechcomFinance Department
 TCB divested from TechcomFinance


1993 2005 2007-2008 2009 2014-2015 2017 2018 2019 2020 2021

 TCB ranked first in credit rating Officially complied with Focused on building a
HSBC bought 10% of equity  Increase the charter
equivalent to “national credit rating Basel II banking platform on three
capital to VND 5,400 core pillars of Talent,
ceiling” announced by S&P
billion Digital, and Data
 Led in Bancassurance products,
 Partner with leading
strategic cooperated with Manulife
global strategic
 Repurchased shares from HSBC
consultant McKinsey

Organization’s structure

Techcom Securites Joint Techcom Capital Joint Stock Vietnam Technological and
Stock Company Company (Techcom Capital – TCC) Commercial Joint Stock Bank –
(Techcom Securities- TCBS) Charter capital: VND 45 billion Asset Management Company
Charter capital: VND 1,124 billion % owned by TCB: 89% Limited (AMC)

% owned by TCB: 89% Charter capital: VND 410 billion

% owned by TCB: 100%

Shareholding structure (as of 31 December 2021) 2021-2025 Strategy

1 CASA ratio

55%
22.50%
2 ROE
77.50% 20%

3 Market cap

USD 20 billion

Owned by domestic shareholders 4 Net Fee Income/TOI

Owned by foreign shareholders
>30%

Source: Company data, Shinhan Securities Vietnam

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COMPANY REPORT September 9th 2022
Vietnam Technological and Commercial Joint Stock Bank (TCB)

Investment Catalyst & Theses

Outstanding asset quality in the industry with a thick capital buffer, low NPL ratio,
high NPL coverage
1. Capital adequacy ratio (CAR) is highest in the system, with low level of leverage

CAR - TCB Leverage (Total assets/Total equity) - TCB

15.51% 15.80% 15.70% (x)

15.20% 15.20% 15.00% 15.10%
16% 14.60%
12
14% 10.00
12% 10
9.40%
10% 8
6.20 6.18 5.89 6.11 5.97
8%
6
6%
4% 4

2% 2
0%
0
1Q21 2Q21 3Q21 4Q21 1Q22 2Q22
2017 2018 2019 2020 2021 1H2022
2017 2018 2019 2020 2021 2022

Source: Company data, Shinhan Securities Vietnam

Capital adequacy ratio (CAR) at the end of 2021 reached 15%, and in 1H/2022 achieved 15.7%, almost
twice as high as the Basel II requirement of 8%, and led the banking system to help TCB (1) create a solid
foundation for strong growth, (2) form the basis for being granted a high credit growth, (3) become one of
the banks highly appreciated by international organizations with many promising developments, and is limited
only by the national credit rating ceiling from Moody's.

Leverage of listed banks

(x)
25.0
21.1

20.0
16.5
15.4
15.0 13.0
12.3
10.4 10.7 10.9
9.3
10.0
6.0 6.2

5.0

0.0
TCB VPB MBB ACB TPB HDB VIB VCB STB CTG BID

2021 1H2022

Source: Fiinpro, Shinhan Securities Company

In addition, TCB's equity increased more than 3 times, from VND 26,931 billion in 2017 to VND 93,041 billion
in 2021. The thriving capital increase in 2018 supported a sharp rise in TCB's capital buffer and equity, helping
TCB surpass that of its private banking group competitors. By the end of 2021, TCB ranked 3rd in the system
in equity, just behind two state-owned banks. TCB's leverage ratio in the past 3 years was only around 6x,
the lowest among listed banks. Those advantages opened up TCB's potential to grow ROA and ROE, as this
bank has achieved the highest ROA in the system, with ROA of 3.7% and ROE of 21.7% in 2021. We believe
that TCB's capital buffer will continue to be strengthened when the SBV has approved a maximum increase
in charter capital by VND 63,237 billion by issuing shares under the employee stock ownership plan (ESOP)
in 2022.

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COMPANY REPORT September 9th 2022
Vietnam Technological and Commercial Joint Stock Bank (TCB)

2. Lowest non- performing loan (NPL) ratio in the industry with high loan- loss reserve (LLR)
ratio

NPL ratio and LLR ratio- TCB

200% 1.75% 2.0%

1.61%

160% 1.33%
1.5%

120%
0.70%
1.0%
0.66% 0.60%
80% 0.57%
0.47%
0.38% 0.36%
0.5%
40%

0% 0.0%
1Q21 2Q21 3Q21 4Q21 1Q22 2Q22
2017 2018 2019 2020 2021 2022

LLR NPL

Source: Fiinpro, Shinhan Securities Company

TCB's low NPL ratio and high LLR ratio help affirm its asset quality in the current volatile economy. By the end
of 2021, TCB's NPL ratio (NPL) reached 0.66%, an increase compared to the end of 2020 due to the impact
of the pandemic, but still lower than the bad debt ratio of the banking system of 1.9% (excluding VAMC).
Thanks to increased provisioning and handling of risky debt, TCB kept NPL below 1% and dropped to 0.6%
as of Q2/2022, the lowest NPL ratio in the system, reflecting the asset's quality and stability during and after
the pandemic. TCB has maintained a high LLR ratio over the years, reaching 162.85% at the end of 2021
and increasing to 171.60% in 1H2022, becoming one of the banks with high LLR in the system. With TCB's
asset quality, we believe in the situation of increasing bad debt when Circular 14/2021/TT-NHNN on
restructuring the term repayment, exemption, or reduction expired on June 30, 2002, TCB would not be
significantly affected.

NPL ratio of listed banks LLR ratio of listed banks

6%
5.25% 600%

5%
500% 506%

4% 400%

3% 2.45% 300% 263%

221%
190% 185%
2% 200% 172%
1.35%
1.20% 1.27% 1.33% 161%
138%
1.03%
0.76% 0.85%
1% 0.60% 0.61% 100% 93%
62% 54%

0% 0%
TCB VCB ACB TPB BID MBB STB HDB CTG VIB VPB VCB BID MBB CTG ACB TCB TPB STB HDB VPB VIB

NPL Q4/21 NPL Q1/22 NPL Q2/22 LLR Q4/21 LLR Q1/22 LLR Q2/22

Source: Fiinpro, Shinhan Securities Vietnam

3. High liquidity
TCB demonstrated its liquidity when keeping the loan-to-deposit ratio (LDR) below the maximum level of
85% regulated by SBV when TCB reached 75% by the end of 2021. LDR increased 78.8% by the end of
Q2/2022 to maximize the profit target, but it was still kept below the prescribed level. In addition, SBV
stipulated that the maximum ratio of short-term capital for medium and long-term loans would decrease
from 40% to 37% from Q4/2021 and was expected to drop to 34% from Q4/2022. While maximizing loan
balance, TCB maintained this ratio well, reaching 28.8% at the end of 2021 and 32% at the end of Q2/2022.
TCB has also implemented plans to increase liquidity buffers with medium and long-term capital sources
such as foreign syndicated loans. It not only helps TCB optimize profits but also helps the Bank to ensure
liquidity risk.

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COMPANY REPORT September 9th 2022
Vietnam Technological and Commercial Joint Stock Bank (TCB)

Loans to deposits ratio- TCB Short-term funds used for medium and long-term loans- TCB

90%
45% 40.0%
85%
37.0%
40% 43.0%
80%
39.1%
79.2% 78.8%
35% 38.4%
75% 76.6%
78.1%
76.6% 76.7% 34.4%
76.3% 33.9%
75.0% 30% 32.6% 32.2% 32.0%
31.5%
70% 71.9%
25% 28.8%
65%
65.5% 20%
60%
15%
55%
10%
50%
5%
1Q21 2Q21 3Q21 4Q21 1Q22 2Q22
1Q21 2Q21 3Q21 4Q21 1Q22 2Q22
2017 2018 2019 2020 2021 2022
2017 2018 2019 2020 2021 2022
LDR LDR regulated by SBV
Short-term funds used for medium and long-term loans Regulated by SBV

Source: Company data, Shinhan Securities Vietnam

High profitability benefits from the low capital cost

Average net profit margin (NIM) in the last 5 years of TCB increased from 4.0% to 5.6% at the end of 2021, and
also in 6M/2022, TCB is leading the system, excluding VPB with a different model compared to other banks. The cost
of capital (COF) gradually decreased over the years, reaching 2.1% at the end of 2021 and increasing slightly to 2.2%
in 1H2022. The gap between NIM and COF shows that TCB has excellent control over capital costs, helping to
compete in lending rates and improve NIM.

NIM ratio and COF ratio- TCB Components of deposits- TCB

5.6% 5.6% 5.6% 5.6% 5.6% (bn VND)

6.0%
5.2%
4.9% 350,000 60%
5.0%
4.2% 300,000
4.0% 50.47% 50%
3.7% 47.46%
4.0% 3.7% 46.15%
3.4%
4.2% 4.0% 250,000
40%
3.0% 2.4% 2.3% 2.3% 200,000 34.46%
2.2% 2.1% 2.2%
28.70% 30%
2.0% 150,000 24.12%
20%
1.0% 100,000

50,000 10%
0.0%
1Q21 2Q21 3Q21 4Q21 1Q22 2Q22
0 0%
2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 1H2022
Current deposits Term deposits
NIM COF
Margin deposits CASA (%)

Source: Company data, Shinhan Securities Vietnam

TCB has attracted many customers as a leading bank in the process of "zero fees" and investing heavily in digital
transformation. TCB is leading in the system regarding the CASA ratio (including demand deposits and margin). This
low-cost capital of TCB has continuously increased for many years and reached VND 158,858 billion at the end of
2021, and CASA ratio reached 50.5%, a slight decrease in Q2/2022 with CASA of 47.5%, reaching VND 152.659
billion when customers still looking for more profitable investment channels. However, we believe this is only a
temporary decrease when the economy is experiencing many fluctuations. In the context that banks are racing to
increase deposit interest rates to mobilize capital in 6M/2022, banks with high CASA ratios, like TCB, have a superior
advantage in competing for loan interest rates and the ability to preserve/improve NIM. From 2020 to 1H2022, TCB
has led the system regarding CASA ratio. Besides successfully mobilizing customer deposits, TCB set a record with
an offshore loan syndication market of up to USD 1 billion in 06/2022. Previously, TCB had successfully approached
foreign capital twice, with 500 million USD in 2020 and 800 million USD in 2021. We believe that with solid equity
capital and low cost, TCB can expand NIM and potentially develop retail banking, reaching individual customers and
small SMEs.

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COMPANY REPORT September 9th 2022
Vietnam Technological and Commercial Joint Stock Bank (TCB)

Therefore, TCB has steadily increased net interest income thanks to the credit growth with stable NIM, reaching
nearly VND 26,699 billion in 2021 (+42.4% YoY), and VND 15,905 billion in 6M/2022 (25.1% YoY). Along with the
considerable increase in operating income, TOI in 2021 will reach VND 37,076 billion (+35.4% YoY), and VND 21,148
billion 1H2022 (+16.6% YoY).

CASA ratio of listed banks

60.0%

47.5%
50.0% 44.3%

40.0% 34.4%

30.0% 24.9%
22.4%
19.6% 19.4% 19.0% 18.1%
20.0%
13.8%
12.3%
8.2% 7.7%
10.0%

0.0%
TCB MBB VCB ACB STB CTG BID VPB TPB VIB HDB SHB LPB

2020 2021 1H2022

Source: Fiinpro, Shinhan Securities Company

The ability to adjust credit structure allows TCB to change appropriately with the
market
TCB's separated credit balance reached VND 387.973 billion in 2021, credit growth gained 22.1%, and consolidated
credit balance was VND 410,150 billion (+26.5% YoY). In 6M/2022, separated credit balance reached VND 421.121
billion, and credit growth gained 8.5% since the beginning of the year. Corporate bonds accounted for 15.3% of the
consolidated credit balance by the end of 2021, decreasing to only 11.2% in 6M/2022. Specifically, corporate bonds
decreased from VND 62,809 billion in 2021 (+34.4% YoY), and VND 76,782 billion (+22.3% YoY) in Q1/2022 and
to VND 49,345 billion in Q2/2022 (-36% QoQ). The fall showed that TCB has flexibly restructured its credit portfolio
in the context of financial market fluctuations, with the SBV tightening investment in corporate bonds and banks
having almost reached their credit growth limits. Especially, they reduced corporate bonds to reserve more room for
customer loans.

The bank has also gradually shifted the structure of customer loans from businesses to individuals. Outstanding
personal loans reached VND 161,657 billion (+45.5% YoY) at the end of 2021, accounting for 46.5% of total
outstanding customer loans. Meanwhile, the proportion of outstanding loans to businesses (including foreign
enterprises) decreased from 60% in 2020 to 53.3% in 2021. The restructure aligned with TCB's development strategy
in the coming years, increasing and strengthening product development for individual groups.

Credit components- TCB Loans by customer types- TCB

(VND bn)
100.0%
400,000 40.0% 90.0%
34.7%
350,000 35.0% 80.0% 40.3% 40.0%
45.3% 45.6% 46.5%
70.0%
300,000 30.0%
60.0%
23.3%
250,000 22.1% 25.0% 50.0%
19.4%
40.0%
200,000 20.0%
30.0% 52.1% 57.0%
48.6% 50.6% 51.4%
150,000 12.1% 15.0% 20.0%
8.5%
100,000 10.0% 10.0%
0.0%
50,000 5.0% 2017 2018 2019 2020 2021

- 0.0% State-owned companies Limited and joint stock Companies

2017 2018 2019 2020 2021 1H2022
Loans to customers Corporate bonds Credit growth Foreign companies Local and private companies

Individuals Others

Source: Fiinpro, Shinhan Securities Company

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COMPANY REPORT September 9th 2022
Vietnam Technological and Commercial Joint Stock Bank (TCB)

TCB can be flexible in allocating its corporate loan portfolio by sector. The Bank has gradually shifted from
real estate lending to FMCG, retail, and logistics industries, continuing to diversify its portfolio when the real
estate market has changed and tightened by the State. Specifically, real estate lending decreased from VND
95,913 billion in 2021 to VND 94,358 billion in 1H2022. The proportion decreased from 51.7% to 50.6%,
while the proportion of other industries such as trade and logistics have grown. TCB has gradually shifted
from high-risk loan products to home and car loans for individual customers with lower risk. Home loan
balance by the end of 2021 reached more than VND 126,300 billion, accounting for 78% of the proportion
of loans to individuals, and continued to increase this ratio to 82% per year to more than 168 trillion VND
(+25.1% QoQ, 66% YoY) in 6M/2022.

Loans to corporate customers by sector- TCB Loans to individual customers by product- TCB

100% 100%

90%
80% 15.5%
40.2%
21.2% 51.7% 50.6% 80%
54.9%
60% 70%

60%
40% 26.4% 50%
19.7% 20.3%
24.2% 18.9%
14.5% 40% 81.0% 79.0% 79.0% 79.0% 82.0%
78.0% 78.0% 78.0%
20% 69.0%
74.0%
30%
0% 20%
2017 2018 2019 2020 2021 1H2022
Trading Agriculture and forestry 10%
Manufacturing Construction 0%
Personal and public services Warehousing, transportation and communication 2017 2018 2019 2020 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22

Training and education Estate agents and consultants

Housing loans Car loans Credit cards Others
Hotels and restaurants Financial services

Source: Company data, Shinhan Securities Company

A unique ecosystem provides a strong and diverse source of non-interest income
Cooperation between TCB and large corporations such as Masan and Vingroup has brought many benefits
to TCB as it has many opportunities to approach customers, especially retail customers. If TCB and Masan
make the mini supermarket system the center of financial transactions, TCB can attract many deposits from
customers there. In addition, with the 15-year exclusive cooperation agreement between TCB and Manulife
since 2017, TCB has increased its bancassurance income, contributing to the growth of TCB's non-interest
income.

Net services income made up for a large proportion of TCB's non-interest income, accounting for more than
60% at the end of 2021 and over 70% in 6M/2022. Income from card and payment services reached VND
3,739 billion (+28.3% YoY) and VND 2,483 billion (+38.7% YoY) in 6M/2022. Income from the insurance
segment increased continuously over the years and reached VND 1,558 billion at the end of 2021 (+88.4%
YoY), reaching VND 617 billion (+31.5% YoY) 1H2022. Total income from TCB services in 2021 achieved
VND 6,382 billion (+52.4% YoY), and 1H2022 reached VND 3,870 billion (+39.1% YoY).

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COMPANY REPORT September 9th 2022
Vietnam Technological and Commercial Joint Stock Bank (TCB)

Non- interest income- TCB Income from service activities- TCB

(bn VND)
(bn VND)
9,000
12,000
8,000

10,000 7,000

6,000
8,000
5,000
6,000 4,000
3,000
4,000
2,000
2,000 1,000
-
-
2017 2018 2019 2020 2021 1H2022
2017 2018 2019 2020 2021 1H2022
(2,000)
Settlement services Treasury activities Agency services
Net Profit from services
Net gain from gold trading and foreign currencies Guarantee activities Insurance activities Brokerage service
Net gain from trading securities
Net gain from Investment securities Others
Net profits from other activities

Source: Company data, Shinhan Securities Company

TCB always controls operating costs well, so its cost-to-income index (CIR) is always relatively low compared to other
banks in the system. CIR at the end of 2021 reached 30.1% and 30.3% in 6M/2022. TCB's operating expenses
mainly come from staff salaries, reaching VND 6,356 billion at the end of 2021 (+22.9% YoY), accounting for more
than 56% of total operating expenses. In 2021, TCB started implementing the 2021-2025 plan, focusing on building
a banking platform on the pillars of Talent, Digital, and Data. Thanks to efforts to control costs at around 30% and
reduce credit costs in late 2021 and early 2022 as many customers' finances were restored, TCB's NPAT grew again
from 2020 after a decrease in NPAT growth rate in 2019 due to Covid-19. By 2021, NPAT reached VND 18,415 billion
(+46.4% YoY), the second highest in the banking system, just behind VCB. NPAT in 6M/2022 continued to increase
compared to the same period last year to reach VND 11,497 billion (+23.8% YoY), completing more than 52% of
the plan set for the whole year of 2022.

Interest income- TOI and NPAT- TCB ROE and ROA- TCB
(bn VND)
30.0% 27.7%
40,000 120%

35,000 104.7%
100% 25.0%
21.5% 21.7% 21.8%
30,000
80% 18.3%
25,000 20.0% 17.8%

20,000 60%
15.0%
15,000 46.4%
40%
10,000 31.5%
23.0% 10.0%
20.7% 20%
5,000
3.7% 3.6%
- 0% 5.0% 2.6% 2.9% 2.9% 3.1%
1Q2022 2Q2022
2017 2018 2019 2020 2021 2022
0.0%
Inerest income TOI NPAT 2017 2018 2019 2020 2021 1H2022

NII growth rate TOI growth rate NPAT growth rate ROE ROA

Souce: Fiinpro, Shinhan Securities Company Source: Company data, Shinhan Securities Company

TCB strengthens its position as a high-performing bank with a 5-year average return on equity (ROE) of over
21%, belonging to the group of banks with high ROE in the system. In 2021, TCB's ROE reached 21.7%,
and return on assets (ROA) was the highest in the industry at 3.7% in 2021. Given TCB's current capabilities,
we expect the Bank to continue to maintain its position in the industry.

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COMPANY REPORT September 9th 2022
Vietnam Technological and Commercial Joint Stock Bank (TCB)

ROE (TTM) of listed banks ROA (TTM) of listed banks

35%
4%
29% 3.4%
30%
4%
25% 3.1%
24%
25% 23% 3%
22% 22% 21% 2.5%
20% 20% 20%
3% 2.3% 2.3%
20%
1.9% 1.9%
15% 15% 2% 1.7%
15% 1.5% 1.4%
10% 2%
10% 0.9%
1% 0.7% 0.7%

5% 1%

0% 0%
VIB ACB MBB LPB VCB HDB TCB TPB SHB VPB CTG BID STB TCB VPB MBB VIB ACB TPB HDB VCB LPB SHB CTG BID STB

2021 1H2022 2021 1H2022

Source: Fiinpro, Shinhan Securities Company

Earnings estimates
TCB achieved outstanding business results and maintained operating efficiency in the first 6 months of 2022,
with PBT reaching VND 14.1 trillion, TOI reaching VND 21.1 trillion, CASA value and ROA ranked first in the
system with 47.5 billion and 3.6%, respectively. Besides, asset quality continued to strengthen, with NPL
reached 0.6%, the lowest in the industry, while LLR increased to 171.6%. Based on the positive results from
the first half of the year of TCB, we expect:

Credit growth in 2022 is forecasted to increase by 15%, based on the SBV’s regulations and TCB's plan. The
growth rate decreased compared to 2021 due to unpredictable economic changes and the lack of credit
room. Credit growth is forecasted to increase to 18% in 2023, with the expectation that the economy will be
stable and TCB has enough financial capacity to enhance the credit room as high as in previous years.
Besides, we forecast customer deposits to increase by 21.5% in 2022 as TCB has also participated in the
race to raise deposit interest rates, with a CASA ratio of 49%.

We expect NIM 2022 to reach 5.6%, down slightly from 2021 at 5.7% as deposit interest rates increase
faster than lending interest rates and credit growth has little room. NIM will rise again to 5.7% in 2023 thanks
to TCB having low-cost advantage with high CASA ratio and foreign loans. With this assumption, we forecast
TCB's net interest income to grow by 21.4% in 2022 to VND 32,410 billion and increase to VND38,568 billion
(+19% YoY) in 2023.

We forecast that income from card, payment, and bancassurance services will continue to grow, contributing
to TCB's growth in non-interest income. Specifically, income from service activities is forecasted to increase
by 30% in 2022 and 2023 to reach VND 4,860 billion and VND 6,319 billion, respectively; and income from
bancassurance activities will increase by 25% in 2022 and 2023 to gain VND 1,948 billion and VND 2,435
billion, respectively. Thus, TOI in 2022 and 2023 is forecast to increase by 15% and 18%, reaching VND
42,454 billion and VND 50,118 billion, respectively.

Operating expenses are projected to increase by an average of 21% in 2022/2023, mainly focusing on
personnel costs with a forecast increase of 25%. The CIR ratio is forecast to increase slightly to 33% in
2022/2023 from 32% in 2021. The projected increase in operating expenses is reasonable given that TCB's
plan for 2021-2025 is to develop 3 pillars Talent, Digital, Data, so the Bank focuses on investing in technology
and implementing many procedures to recruit talents from abroad.

We forecast bad debt ratio in 2022 to increase slightly to 0.7% and 0.75% in 2023 when Circular 14/2021/TT-
NHNN expires. This forecast is equivalent to provision expense on total outstanding loans of 0.4%/0.44% in
2022/2023, in line with TCB's plan.

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Vietnam Technological and Commercial Joint Stock Bank (TCB)

With the above assumptions, we forecast PBT to grow 17.2% and 15.1%, respectively, reaching VND 27,243
billion and VND 31,359 billion in 2022 and 2023. ROE will get 20.6%/19.3% in 2022/2023, and ROA will
maintain at 3.4%/3.3% in the next 2 years. ROE has slightly decreased as we believe TCB plans to increase
its charter capital up to VND 63,200 billion through employee stock options (ESOP), while profit growth is not
fast enough to compensate capital growth rate.

Valuation and Recommendation

Initiate coverage with BUY rating and target price of VND 58,700

We initiate coverage Vietnam Technological and Commercial Joint Stock Bank (TCB) with a buy
recommendation and a target price of VND 58,700, corresponding to an increase of 56% from the current
price. For a long-term view, TCB is an investment that can be considered with following advantages:

1) Oustanding asset quality in the industry with a thick capital buffer, low NPL ratio, high NPL coverage

2) High profitability benefits from the low capital cost

3) The ability to adjust credit structure allows TCB to change appropriately with the market

4) A unique ecosystem provides a strong and diverse source of non-interest income

Valuation

We apply a combination of Residual income (RI) method and P/B with 60%/40% weights to value TCB.

RI valuation method
(bn VND) 2H2022F 2023F 2024F 2025F 2026F
Cost of equity 11.97% 11.97% 11.97% 11.97% 11.97%
Cost of equity after 2026 11.97%
Net income 10,300 25,087 30,592 34,765 39,412
Residual income (RI) 4,731 11,334 13,835 14,347 14,833
Present value (PV) of RI 4,495 9,520 10,377 9,613 8,900

Terminal value of RI (bn VND) 136,565

Terminal growth (%) 1.0%

PV of RI (bn VND) 81,939

PV of terminal value (bn VND) 42,904
Beginning equity (bn VND) 104,473
Total value (bn VND) 229,315
Total outstanding shares (*) (mn) 3,517
Target price (VND) 65,202

Cost of Equity (%) 11.97%

Beta (x) 1.23
Adjusted beta (x) 1.15
Risk-free rate (%) 3%
Equity risk premium (%) 7.8%
Source: Shinhan Securities Vietnam

(*) Number of outstanding shares after TCB issues 6.32 million shares in Employee Stock Ownership Plan (ESOP) in 2022.

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Vietnam Technological and Commercial Joint Stock Bank (TCB)

Regarding P/B method, we apply P/B average of banking industry including commercial joint

stock banks which have equivalent asset size as of 30/08/2022.

Ticker P/B
ACB 1.59
EIB 1.97
HDB 1.59
LPB 1.06
MBB 1.59
MSB 1.18
OCB 1.04
STB 1.30
TPB 1.52
VPB 1.55
VIB 1.87
P/B average 1.48
Source: Fiinpro, Shinhan Securities Vietnam

Valuation
Method Tỷ trọng Giá mục tiêu
Residual income 60% 65,202
P/B average (1.5x) 40% 49,004
Target price 58,700
Source: Shinhan Securities Vietnam

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COMPANY REPORT September 9th 2022
Vietnam Technological and Commercial Joint Stock Bank (TCB)

TCB’s PER chart TCB’s PBR chart

(x) (x)
16 4

14 3.5

12 3 PB
PE

10 +1Std 2.5 +1Std

+2Std +2Std
8 2
-1Std -1Std
6 -2Std
1.5 -2Std

4 Mean 1 Mean

2 0.5

0 0
2018 2019 2020 2021 2022 2018 2019 2020 2021 2022

Source: Bloomberg, Company data, Shinhan Securities Vietnam Source: Bloomberg, Company data, Shinhan Securities Vietnam

TCB’s PER band chart TCB PBR band chart

VND
VND
80,000
80,000

60,000
Price
60,000 Price
P/BV of 2.5x
P/E of 13.3x
P/BV of 2.1x
P/E of 11.3x 40,000
40,000 P/BV of 1.7x
P/E of 9.3x
P/BV of 1.3x
P/E of 7.3x
20,000 P/BV of 0.9x
20,000 P/E of 5.3x

0 0

Source: Bloomberg, Company data, Shinhan Securities Vietnam Source: Bloomberg, Company data, Shinhan Securities Vietnam

TCB’s share price vs. inflation rate TCB’s PBR vs. ROE forward
(VND) (%) (x) (%)
70,000 7
4 40
6
60,000 3.5 35
5
50,000 3 30
4
2.5 25
40,000 3
2 20
30,000 2

1 1.5 15
20,000
0 1 10
10,000
-1 0.5 5

0 -2
0 0
6/2018
7/2018
9/2018

2/2019
4/2019
6/2019
7/2019
9/2019

2/2020
4/2020
6/2020
7/2020
9/2020

2/2021
4/2021
6/2021
7/2021
9/2021

2/2022
4/2022
6/2022
8/2022
11/2018
12/2018

11/2019
12/2019

11/2020
12/2020

11/2021
12/2021

2018 2019 2020 2021 2022

Price Inflation ROE dự phóng P/B dự phóng

Source: Bloomberg, Company data, Shinhan Securities Vietnam Source: Bloomberg, Company data, Shinhan Securities Vietnam

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Vietnam Technological and Commercial Joint Stock Bank (TCB)

Key event chart of Techcombank

Positive Q1 2021, extending

70,000 resilience throughout the
pandemic 4th and most
severe COVID
wave
60,000

50,000
Trippled charter
capital
Covid breakout &
40,000 national lockdown Covid breakout &
PBT gained over VND
12 trillion national
lockdown
30,000

20,000

10,000

0
2018 2019 2020 2021 2022

Source: Bloomberg, Company data, Shinhan Securities Vietnam

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Vietnam Technological and Commercial Joint Stock Bank (TCB)

Risks
Inflation risk
Inflation risks spread in the near future, stemming from the context of high inflation in the world, forcing
central banks to raise interest rates. The pressure to increase deposit interest rates is high, leading to an
increase in borrowing rates, but it will be later than deposit rates, leading to narrower profit margins.

Increase in bad debt

Bad debt has a risk of increasing, potentially exposing the whole system. Especially when Circular 14 expires
on June 30th, 2022, the loans are facilitated to retain the debt group 1 and 2 during the period affected by
the pandemic, then will be forced to convert into bad debt if they cannot recover timely.

Unstable real estate market

Real estate loans account for a large proportion of Techcombank’s loan portfolio so that the Bank may face
the risk of cross-default from loans secured by real estate. In addition, with limited credit resouorces, bond
issuance has become an effective method of raising capital for real estate businesses. However, real estate
bonds are facing many fluctuations, so they can significantly impact on the Bank.

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Vietnam Technological and Commercial Joint Stock Bank (TCB)

Appendix: Financial statements

Balance sheet Financial indicators

Year (bn VND) 2020 2021 2022F 2023F 2024F Year 2020 2021 2022F 2023F 2024F
Total assets 439,603 568,729 690,231 825,292 994,099 Growth (% YoY)
Cash and precious metals 3,664 3,579 6,101 10,387 16,341 Loans to customers 20.2 25.2 20.0 20.5 21.5
Balances with the SBV 10,253 4,909 5,922 6,971 8,308 Deposits from customers 20.0 13.4 21.5 17.3 18.3
Placements with and loans to 28,995 70,515 90,804 106,846 125,286 Shareholders’ equity 20.2 24.7 23.5 21.8 21.9
other credit institutions
Total assets 14.6 29.4 21.4 19.6 20.5
Trading securities 8,348 5,071 4,816 5,298 6,092
Derivatives and other financial Net interest income 31.5 42.4 21.4 19.0 23.7
assets - 294 294 294 294 Net non-interest income 26.7 20.3 -3.2 15.0 15.6
Loans and advances to PPOP 33.9 40.7 11.6 16.1 21.3
275,310 343,606 412,138 496,537 603,156
customers Net profit before tax 23.1 47.1 17.2 15.1 21.9
Debts purchase - 133 140 147 154 Net profit after tax 23.0 46.4 18.4 15.1 21.9
Investment securities 84,447 97,586 106,323 117,500 130,276 Profitability (%)
Long-term investments 12 13 13 14 14 NIM 4.9 5.7 5.6 5.7 5.9
Fixed assets 4,613 7,224 11,133 16,530 24,257 ROA 3.0 3.6 3.4 3.3 3.3
Investment properties 1,125 1,089 1,126 1,167 1,209 ROE 18.0 21.5 20.6 19.3 19.3
Other assets 22,836 34,711 51,420 63,601 78,712 Liquidity (%)
Total liabilities 364,988 475,687 575,332 685,306 823,522 LDR 78.2 74.7 83.9 83.2 82.4
Due to Gov and Loans from SBV 0 1 1 1 1 Loans/Deposits 99.2 109.2 109.0 112.0 115.0
Deposits and Loans from other 47,485 112,459 139,511 173,342 215,718 Asset quality
credit institutions
Deposits from customers Leverage (x) 5.9 6.1 6.0 5.9 5.8
277,459 314,753 382,394 448,442 530,644
Derivatives and other financial NPL ratio (%) 0.5 0.7 0.7 0.8 0.8
267 - - - - LLR ratio (%) 171.0 162.9 160.1 151.8 145.1
liabilities
Funds received from Gov, Reverse/total credit (%) 0.7 0.9 1.0 1.0 1.1
international and other - - - - - Credit costs/total loans (%) 0.9 0.8 0.4 0.4 0.4
institutions Credit costs/total credit (%) 0.8 0.6 0.4 0.4 0.4
Convertible bonds/CDs and other
valuable papers issued 27,900 33,680 35,619 41,969 50,948 Per share items (VND)
Other liabilities 11,878 14,796 17,808 21,552 26,212 EPS 3,590 5,245 6,197 7,133 8,698
BPS 21,151 26,259 32,304 39,296 47,822
Shareholder’s equity 74,615 93,041 114,898 139,986 170,577
PPOP/share 5,235 7,365 8,217 9,542 11,572
Capital 35,526 35,586 35,649 35,649 35,649
Reserves 6,790 9,156 20,053 32,596 47,892
Source: Company data, Shinhan Securities Vietnam
Retained earnings 31,816 47,453 57,920 69,969 84,662
Minority interest 484 847 1,274 1,763 2,357
Total liabilities and equity 439,603 568,729 690,231 825,292 994,099

Income statement
Year (bn) 2020 2021 2022F 2023F 2024F
Interest and Similar Income 29,002 35,503 45,434 55,349 69,005
Interest and Similar Expenses (10,251) (8,805) (13,024) (16,781) (21,299)
Net Interest Income 18,751 26,699 32,410 38,568 47,706
Net Fee and Commission Income 4,525 6,382 5,394 6,488 7,845
From foreign currency and gold 1 231 220 242 266
dealings
From trading of trading securities 321 152 160 176 194
From disposal of investment
securities 1,497 1,804 1,985 2,183 2,402
Net Fee and Commission Income 2,279 1,803 2,282 2,457 2,648
Dividends income 4 4 4 4 4
Total non-interest income 8,627 10,378 10,045 11,551 13,358
Total operating income 27,379 37,076 42,454 50,118 61,065
General and Admin expenses (8,967) (11,173) (13,556) (16,558) (20,366)
Operating Profit Before
18,411 25,903 28,898 33,561 40,699
Provision (PPOP)
Provision for credit losses (2,611) (2,665) (1,656) (2,202) (2,459)
Profit before tax 15,800 23,238 27,243 31,359 38,240
Corporate income tax (3,218) (4,840) (5,449) (6,272) (7,648)
Net profit after tax 12,582 18,415 21,794 25,087 30,592
Attributable to parent company 12,325 18,052 21,364 24,592 29,988

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Vietnam Technological and Commercial Joint Stock Bank (TCB)

Vietnam Technological and Commercial Joint Stock Bank (TCB VN)

Share price Target price Target price gap (%)

Date Rating
(pts) (VND) (VND) TB Max/Min
VN Index (LHS) TCB VN Equity (RHS)
1,600 60,000 September 9th , 2022 (Initiation) BUY 58,700 13.2 3.2/26.1

1,500 50,000

1,400 40,000

1,300 30,000

1,200 20,000

1,100 10,000

1,000 0
09/21 12/21 03/22 06/22

Target price
(VND)
70,000

60,000

50,000

40,000

30,000

20,000

10,000

-
06/2018

09/2018

12/2018
03/2019

06/2019

09/2019

12/2019

03/2020

06/2020

09/2020

12/2020
03/2021

06/2021

09/2021

12/2021
03/2022

06/2022

09/2022

Note: Calculation of target price gap based on past 12 months

Shinhan Securities Vietnam

Stock Sector
 BUY: Expected 12-month gain of 15% or more  OVERWEIGHT: Based on market cap, largest share of sector stocks under coverage is
 HOLD: Expected 12-month loss of 15% to gain of rated BUY
15%  NEUTRAL: Based on market cap, largest share of sector stocks under coverage is rated
 SELL: Expected 12-month loss of 15% or more HOLD
 UNDERWEIGHT: Based on market cap, largest share of sector stocks under coverage
is rated SELL

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Vietnam Technological and Commercial Joint Stock Bank (TCB)

Compliance & Disclosure Notice

Analyst Certification
 The following analysts hereby certify that their views about the companies and securities discussed in this report are accurately expressed and that they have not
received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report: Xuan Nguyen

Important Disclosures & Disclaimers

 As of the date of publication, Shinhan Securities Vietnam Co., Ltd. does not beneficially own 1% or more of any class of common equity securities of the following
companies mentioned in this report: TCB VN
 Shinhan Securities Vietnam Co., Ltd. or one of its affiliates, and/or their respective officers, directors, or employees may have interests, or long or short positions, and
may at any time make purchases or sales as a principal or agent of the securities of the companies mentioned in this report.
 As of the date of publication, research analysts responsible for this report and members of their households do not have any financial interest in the debt or equity
securities of the companies mentioned in this report.
 Research analysts responsible for this report receive compensation based upon, among other factors, the overall profitability of Shinhan Securities Vietnam Co., Ltd.
including profits derived from investment banking. The analysts responsible for this report may also receive compensation based upon, among other factors, the overall
profitability of sales and trading businesses relating to the class of securities or financial instruments for which such analysts are responsible.
 All opinions and estimates regarding the companies and their securities are accurate representations of the research analysts’ judgments and may differ from actual
results.
 This report is intended to provide information to assist investment decisions only, and should not be used or construed as an offer or a solicitation of an offer to buy or
sell any securities. The information herein has been obtained from sources deemed reliable, but such information has not been independently verified and no guarantee,
representation, or warranty, expressed or implied, is made as to its accuracy, completeness, or correctness. Shinhan Securities Vietnam Co., Ltd. makes the best effort
but does not guarantee the accuracy, completeness, or correctness of information and opinions translated into English from original Vietnamese language materials.
Shinhan Securities Vietnam Co., Ltd. accepts no liability whatsoever for any direct, indirect, and/or consequential loss arising from any use of this material or its contents.
Stock selection and final investment decisions should be made at the investor’s own and sole discretion.
 This report is distributed to our customers only, and any unauthorized use, duplication, or redistribution of this report is strictly prohibited.
 Investing in any Vietnamese securities or related financial instruments discussed in this research report may present certain risks. The securities of Vietnamese issuers
may not be registered with, or be subject to the regulations of, the US Securities and Exchange Commission. Information on Vietnamese securities or related financial
instruments may be limited. Foreign companies may not be subject to audit and reporting standards and regulatory requirements comparable to those in effect within
the US. The value of any investment or income from any securities or related financial instruments discussed in this research report denominated in currencies other
than the Vietnamese won is subject to exchange rate fluctuations that may have a positive or adverse effect on the value of or income from such securities or related
financial instruments.

Distribution
 United States: This report is distributed in the US by Shinhan Investment America, Inc., a member of FINRA/SIPC, and is only intended for major US institutional
investors as defined in Rule 15a-6(a)(2) of the US Securities Exchange Act of 1934. All US persons that receive this document by their acceptance thereof represent
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income to Shinhan Securities Vietnam Co., Ltd. or its affiliates. Pursuant to Rule 15a-6(a)(3), any US recipient of this document wishing to effect a transaction in any
securities discussed herein should contact and place orders with Shinhan Investment America, Inc., which accepts responsibility for the contents of this report in the
US. The securities described herein may not have been registered under the US Securities Act of 1933, as amended, and, in such case, may not be offered or sold in
the US or to US persons unless they have been registered or are in compliance with an exemption from registration requirements.
 All Other Jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact Shinhan Securities
Vietnam Co., Ltd. or its affiliates only if distribution to or use by such customer of this report would not violate applicable laws and regulations and not subject Shinhan
Securities Vietnam Co., Ltd. and its affiliates to any registration or licensing requirement within such jurisdiction.

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